The South Korean government announced a "2026 Tax Reform Plan" on Monday, introducing a domestic production tax credit to reduce taxes for companies manufacturing and selling items deemed critical to economic security, including AI, robots, semiconductors, and secondary batteries. Small modular reactors and micro modular reactors were added to the list of national strategic technologies, making their research and development costs eligible for tax credits of up to 50%. The initiative aims to meet surging power demand driven by AI adoption, reduce the advanced-industry supply chain's dependence on foreign sources, and lift the country's potential growth rate. Deputy Prime Minister Koo Yun-cheol stated the government would establish a system supporting strategically important items based on volume produced and sold domestically, adding future-oriented energy sources to address energy security and future power demand. The government acted due to persistent external uncertainties, including US tariff policy and the war in the Middle East. Six sectors are eligible: solar power, wind power, secondary batteries, semiconductors, core materials, and AI and robot components. The credit amount is calculated by multiplying domestic production and sales volume by a standard credit amount and regional coefficient, with a cap of the lesser of 50 percent of eligible production costs or 50 percent of cumulative investment in the relevant production facility, minus credits already received.